Using the FHA 203k full renovation loan program, much more extensive and substantial repairs or remodeling can be accomplished.

So, you can imagine that the process is a bit more involved. This program also requires that you obtain a 203k Consultant. The Consultant is someone that is knowledgeable about construction and/or rehab and who knows the 203k program.

They will come to the property and meet with you to discuss the anticipated improvements you want to make to the house. They will inspect the property for any health and safety issues required to be included in the rehab and will then provide you with a “Work Write-up” for the project based on the work you would like to have done. This will also be the person who handles all of the draw request and inspections along the way.

Think of the FHA 203k loan as a mini construction or “one time close construction“ loan program where your contractor can ask for as many as 5 draws, and each draw request will need to have an inspector come out to make sure the work has been completed for that draw request prior to any monies being paid.

Upgrade central air/heat

• Repair termite or moisture damage
• Remodeled kitchen and baths
• Changes to eliminate obsolescence and reduce maintenance
• Modernize plumbing, heating, AC and electrical systems
• Install or repair well or septic systems
• Roofing, gutters, downspouts
• Flooring, tiling and carpeting
• Energy conservation improvements
• Major landscaping
• Improvements for accessibility
• New free standing appliances
• Interior and exterior painting
• Foundation repair
• Swimming Pool repairs (not to exceed $1,500)
• Other improvements that are a PERMANENT part of the real estate*

*Luxury items are not permitted to be included in the financing.

What is the role of a HUD 203(k) consultant?

• To do a Property Inspection/Report
• To work with you discussing your renovation needs
• To prepare a Work Write-up and any required architectural and/other exhibits
• To do Draw Inspections, Change Orders and Final Inspection
• To be a liaison between you, the lender and your contractor
• To insure that work is completed in a timely and professional manner
• To watch over the monies spent on behalf of you and your lender

The Contingency Reserve

• 10% to 20% depending on the work involved
• Used for unforseen repairs
• With upfront lender approval this money may be used for extras such as appliances
• At the end, any left over money will become a principle reduction

How are the Contractors paid?

There is no up-front money to the contractor on the FHA Full 203k. The first check will be cut only after the work has begun and the consultant has preformed the first inspection. In Texas work may begin 3 days after closing and funding.

Contractors can have a maximum of 5 draws altogether. The FHA 203k HUD consultant will divide the work into draws depending on the scope of work to be done.

You may do the framing first, then the heating and electric, then the drywall for example. If each of those were in separate draw schedules, the contractor would get paid for each of those as they are completed and depending upon which draw they were to be counted in.

The consultant will go out to see that the work described under the first draw has been completed and will submit a request for that draw.

Hey Realtors - Every get tired of hearing..."I love this house but..."  Well the FHA 203k streamline takes the "but" out of that sentence.  How you ask?  Under the streamline program a home that just needs cosmetic updating is a perfect fit.  This program allows for updates such as granite counter tops, new carpet, fresh paint...just to name a few.